Contact Information: Contact: Steve Workman Senior VP Finance, Chief Financial Officer Finisar Corporation 1-408-548-1000 steve.workman@Finisar.com
Finisar Agrees to Acquire AZNA, LLC and Kodeos Communications, Inc.
Acquisitions Broaden Telecom Product Lines and Add Key Technologies
| Source: FINISAR CORPORATION
SUNNYVALE, CA -- (MARKET WIRE) -- March 26, 2007 -- Finisar Corporation (NASDAQ : FNSR ) announced
today that it has entered into agreements under which it has agreed to
acquire all of the outstanding equity interests in AZNA, LLC, based in
Wilmington, Massachusetts, and Kodeos Communications, Inc., based in South
Plainfield, New Jersey. The agreement with AZNA was signed on March 23,
2007, and the acquisition will be completed on March 26, 2007. The
agreement with Kodeos was signed on March 15, 2007, and the acquisition is
expected to be completed on or about April 5, 2007, subject to certain
closing conditions. Both acquisitions broaden Finisar's product lines
primarily for telecom applications while adding key technologies involving
advanced modulation and electronic signal processing for cost-effectively
extending the reach and tunability of transceivers and transponders for
telecom and datacom applications.
"We have made great progress during the past year in penetrating the market
for 10-40Gb/s transceivers/transponders," said Jerry Rawls, Finisar's
Chairman of the Board, President and CEO. "But we have not had a product
offering which addresses the 10Gb/s 300-pin transponder market for telecom
applications that is expected to approach $300 million in 2008. We believe
the acquisition of Kodeos can be the catalyst for penetrating this market
in a differentiated way."
"Furthermore," Rawls continued, "in acquiring AZNA not only do we broaden
our existing product offering at key customers but by incorporating AZNA's
key technologies across Finisar's existing broad line of products, we
believe we will be able to create a competitive advantage in terms of the
cost, reach and performance of our products for both telecom and datacom
applications."
AZNA, LLC
AZNA develops, manufactures and markets an innovative suite of photonic
components and subsystems which utilize their unique patented Chirp Managed
Directly Modulated Lasers (CML) to enable telecommunications equipment
manufacturers to provide longer reach optical transmitter solutions at
lower cost, better performance and less complexity than those based on
externally modulated lasers (or EMLs). AZNA's unique technology extends the
reach of high power 10Gb/s directly modulated lasers (DMLs) to 200km and
beyond and 2.5Gb/s DMLs to beyond 640km. While AZNA's current product
offering includes 8 channel tunable transmitters, its core technology is
uniquely applicable to full C- and L-band tunable transmitter assemblies.
Finisar has agreed to acquire the equity interests in AZNA for $19.7
million in initial consideration comprised of $2.7 million in cash and two
convertible promissory notes in the principal amount of $15.6 million and
$1.4 million that will be payable, at Finisar's option, in cash or in
shares of Finisar common stock, with the value of such shares to be based
on the trading price of the stock at the time that the shares are
registered for re-sale (or in the case of the smaller note, when escrow
conditions are satisfied). Finisar will be obligated to repay the notes in
cash if the registration of the underlying securities is delayed more than
12 months. Additional consideration of up to $1.8 million in cash may be
paid to certain interest holders subject to meeting certain conditions
during the first year after closing. Finisar also assumed a line of credit
totalling $1.5 million at the time of closing.
Founded in 2002, AZNA has approximately 58 employees all of whom are
located in Wilmington. The Company was profitable on revenues of $6.7
million in calendar 2006.
Kodeos Communications, Inc.
Within the past year, Kodeos was the first to announce a line of 10Gb/s
tunable transponders incorporating optical duobinary (ODB) technology which
enables longer distance transmission and higher dispersion tolerance while
still conforming to the standard 300-pin form factor for telecom
communications applications. Kodeos transponders enable systems architects
to overcome some of their most difficult challenges, including long-reach
and spans which have high optical dispersion, for signal channel, fixed
dense wavelength division multiplexing (DWDM) and widely-tunable C-band or
L-band DWDM systems.
Kodeos ODB-based transmitters use data coding and filtering resulting in
optical pulse trains that have a narrower spectral width and therefore
suffer less from chromatic dispersion and can be transmitted more than
twice the distance of traditional transponders.
In addition to ODB, Kodeos has developed 10 Gb/s signal processing
integrated circuits based on the use of Maximum Likelihood Sequence
Estimator (MLSE) technology that can electronically compensate for fiber
transmission impairments and dramatically increase the transmission
distance and performance of a 300-pin transponder. An MLSE integrated
circuit is used on the receiver side of an optical link and makes the
receiver more tolerant to distortion and signal degradation by processing
blocks of bits at the same time, finding the bit sequence that best matches
the received signal. Kodeos MLSE can correct for all of the major
transmission degradation sources. The advantages of MLSE and ODB are
complementary and provide a powerful platform to enable and cost reduce the
next generation long-haul and metro transport systems.
Finisar will acquire the equity interests in Kodeos for initial
consideration of approximately $7.0 million in cash. Finisar may be
required to pay additional consideration of up to $2.5 million in cash to
certain equity interest holders contingent on the achievement of certain
financial and technical milestones. In addition, Finisar may pay up to $1
million to current Kodeos employees for achievement of certain milestones.
Founded in 2001, Kodeos acquired Intersymbol Communications, Inc. located
in Champaign, Illinois in 2006 for its high-speed signal processing
capabilities. The Company has approximately 19 employees, most of whom work
at its headquarters in South Plainfield, New Jersey.
ABOUT FINISAR
Finisar Corporation (NASDAQ : FNSR ) is a technology leader for fiber optic
subsystems and network performance test systems. These products enable
high-speed data communications for networking and storage applications over
Gigabit Ethernet Local Area Networks (LANs), Fibre Channel Storage Area
Networks (SANs), and Metropolitan Area Networks (MANs) using IP, Fiber
Channel, and SONET/SDH-based protocols. The Company's headquarters is in
Sunnyvale, California, USA. www.Finisar.com
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this press release that are not purely
historical are forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended, including statements
regarding Finisar's expectations, beliefs, intentions, or strategies
regarding the future. All forward-looking statements included in this press
release are based upon information available to Finisar as of the date
hereof, and Finisar assumes no obligation to update any such
forward-looking statements. Forward-looking statements involve risks and
uncertainties, which could cause actual results to differ materially from
those projected. These risks include those associated with the rapidly
evolving markets for Finisar's products and uncertainty regarding the
development of these markets; Finisar's historical dependence on sales to a
limited number of customers and fluctuations in the mix of customers in any
period; ongoing new product development and introduction of new and
enhanced products; the challenges of rapid growth followed by periods of
contraction; intensive competition and the integration of the acquisitions
of AZNA, LLC, and Kodeos Communications, Inc. Further information
regarding these and other risks relating to Finisar's business is set forth
in Finisar's Annual Report on Form 10-K and other reports as filed with the
Securities and Exchange Commission.